South Korean $300 Million Real Estate Project Delayed

A day after Prime Minister Hun Sen announced that Cambodia would construct what would be the world’s second tallest building, an official at the South Korean Posco Engineering and Construction company said yesterday that its $300-million Star River project will be postponed for economic reasons.

In October, Posco Engineering and Construction broke ground near the Bassac River on a three-tower residential complex, which is designed to top 45 stories and be completed in 2013. But with $50 million already spent on the now-completed foundation pilings, the project was officially delayed last month, and it is unclear when it will recommence, said Kevin Jeong, a Posco project manager.

“We analyzed the economic situation in the Cambodian market, and we decided to postpone,” he said from the site’s nearly empty office.

“The problem is Cambodia’s economy is not so well,” he said, explaining that he was referring specifically to the real estate market.

He said Posco would focus its resources on other projects in the region and continue its work on another Cambodian skyscraper, Vattanac Capital tower, which broke ground earlier this year on Monivong Boulevard.

“The project should begin construction again sometime next year, I hope,” he said, adding no date has been set.

Only Thursday, Mr Hun Sen said that a tower would be built on Phnom Penh’s Koh Pich island that would reach 555 meters, about five times higher than the country’s tallest building, the 32-story Canadia Tower. Dubbed Diamond Tower, the project is being designed by the Overseas Cambodian Investment Corporation, but a ground-breaking date has yet to be set.

Tan Hong Kiat, the country head for the property consultancy firm Knight Frank, said Posco’s bad news about its project appeared to undercut the ambitious vision of Diamond Tower.

“At this moment it seems like it does, but you never know what could happen five years later; we cannot predict five years from now,” he said.

He said Posco’s delay is sure to damage confidence in the real estate market even as it becomes more fluid than one year ago and slowly recovers.

“This has a few implications. It will affect people’s confidence levels,” he said. “I think the market is not as bad as we think, it’s very slow-moving.”

He also voiced optimism that Star River would continue, unlike the South Korean-funded mega-project International Finance Complex, which was delayed and ultimately failed with the onset of the economic crisis.

“I don’t think it will be scrapped,” he said.

Sear Chai Lin, the director of Visal Realty, questioned the reasoning behind the delay, noting that the market is better now than when construction began, and that other projects such as Gold Tower 42 and Vattanac Capital are still moving forward.

“I don’t know if it comes from the capital problems or the market activity,” he said. “If they [are] doing the real survey of the market, they might understand in the next few years there will be a market.”

 

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